Important LIBOR Ruling By U.S. Supreme Court

The U.S. Supreme Court ruled on Jan. 21 that investors whose sole antitrustclaim was dismissed from ongoing multidistrict litigation (MDL) over alleged manipulation of the London interbank offered rate (LIBOR) was a final and appealable order. This gives the Plaintiffs a right to an immediate appeal. The ruling reversed the Second Circuit’s refusal to hear the case. The appeal arises from a 2013 district court order dismissing all of the antitrust claims from the MDL. The current suit and others in the MDL followed in the wake of global enforcement actions targeting some of the world’s biggest banks for rigging submissions for the key benchmark rate, which is set by the British Bankers Association and used to determine interest rates for a host of financial arrangements.

Petitioners Ellen Gelboim and Linda Zacher filed a class action asserting one claim under Section 1 of the Sherman Antitrust Act against Bank of America and other institutions. The Gelboim-Zacher action was one of more than 60 actions filed in federal district courts in 13 states. The other actions included antitrust claims as well as other state and federal claims. The actions were consolidated for pretrial purposes in the Southern District of New York pursuant to the MDL statute as “involving one or more common questions of fact.” The district court granted the banks’ motion to dismiss all the antitrust claims in all the actions in the MDL, finding that none of the Plaintiffs could assert a cognizable antitrust injury. As the antitrust claim was the only one in the lawsuit filed by Gelboim and Zacher, they argued that they could immediately appeal the decision as of right as a “final decision” under 28 U.S.C. § 1291.

It should be noted that there are other claims in this case still proceeding in the MDL. Justice Ruth Bader Ginsburg wrote in a 13-page, unanimous opinion:

Petitioners’ right to appeal ripened when the district court dismissed their case, not upon eventual completion of multidistrict proceedings in all of the consolidated cases.

The only claim by these Plaintiffs was dismissed. Therefore, their case had a final order regardless of the remaining cases in the MDL. The court said that cases consolidated into MDL for pretrial proceedings generally still remain separate suits. This means that a decision that completely resolves one of the individual cases can be appealed.

As a result, the justices found that the Second Circuit had erred in deciding on its own motion to refuse the appeal from Plaintiffs Ellen Gelboim and Linda Zacher because the district court’s order did not resolve the entirety of the consolidated Libor litigation. Justice Ginsburg wrote:

The district court’s order dismissing the Gelboim-Zacher complaint for lack of antitrust injury, without leave to amend, had the hallmarks of a final decision. As is ordinarily the case, the [MDL] consolidation offered convenience for the parties and promoted efficient judicial administration, but did not meld the Gelboim-Zacher action and others in the MDL into a single unit.

The court held that the banks’ argument that the Plaintiffs lack the right to appeal until the consolidation is over would leave the Plaintiffs “in a quandary” over when to file their appeal. In fact, Justice Ginsburg could not identify any discrete event or order that would start the jurisdictional 30-day clock for petitioners to file a notice of appeal.

Appeals must be filed in civil suits within 30 days from the judgment being appealed, but often the consolidation in an MDL can wrap up without any judgment being entered and orders returning cases to the courts where they were originally filed are not appealable decisions, according to the opinion. Would-be appellants cannot be made to wait until final disposition of all cases in their original districts, an event that may not occur for several years. Justice Ginsburg wrote:

The sensible solution to the appeal-clock trigger is evident: When the transferee court overseeing pretrial proceedings in multidistrict litigation grants a Defendant’s dispositive motion ‘on all issues in some transferred cases, [those cases] become immediately appealable … while cases where other issues remain would not be appealable at that time.

This decision is great news for clients and firms that participate in MDL proceedings. MDLs are designed to help with judicial efficiency and economy, but without this ruling, they could also unduly delay cases for years while the dismissed Plaintiffs wait for the entire MDL to resolve.